NO MORE FREE TV? COMPULSORY LICENSING AMENDMENT

C O N F I D E N T I A L NASSAU 000624

SIPDIS

PASS TO USTR KENT SHIGETOMI
PASS TO EEB/TPP/IPE JO ELLEN URBAN
PASS TO WHA/CAR JOSLYN MACK-WILSON

E.O. 12958: DECL: 10/07/2019
TAGS: ECON ETRD BF
SUBJECT: NO MORE FREE TV? COMPULSORY LICENSING AMENDMENT
NOW EFFECTIVE

REF: NASSAU 457

Classified By: Charge d'Affaires, a.i. Tim Zuniga-Brown due to reasons
(b) and (d)


1. (C) SUMMARY: The 2004 Amendment to the Compulsory
Licensing Act to outlaw the exception for encrypted
broadcasts became effective October 1, 2009. The amendment
was signed into law September 16 following negotiations with
GCOB officials, Cable Bahamas, USG representatives and
private U.S. cable providers in August 2009. Since then,
Cable Bahamas officials have been pursuing negotiations with
premium cable content providers but have not been able to
reach agreements due to pricing levels. The Cable Bahamas
Chief Operating Officer (COO) expressed concern that Cable
Bahamas will not be able to compete if it cannot obtain the
content that his customers demand. END SUMMARY

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Repeal of the Compulsory License Exception Good First Step(
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2. (U) The 2004 Amendment to the Compulsory Licensing Act to
outlaw the exception for encrypted broadcasts went into
effect October 1, 2009. The original Act provided the legal
basis for Cable Bahamas to extract and distribute encrypted
copyrighted content from U.S. satellite providers whose
footprint extends over The Bahamas without having entered
into agreements with the cable content providers. Instead,
the Act permitted Cable Bahamas to set aside whatever funds
they would have appropriated to the content providers into a
special account that would be used to support operations.
The Act appeared to violate article 11 of the Berne
Convention, which does not permit compulsory licensing for
free, over-the-air cable programming.


3. (U) The GCOB actively engaged on this issue with U.S.
interlocutors. On August 5, 2009, GCOB representatives
hosted a meeting with Cable Bahamas, USG (U.S. Embassy,
United States Trade Representative, Congressional Staffer),
and private U.S. cable providers (HOB, ESPN, Disney)(REF).
Ministry of Finance representatives told EconOff that Cable
Bahamas has been actively negotiating content agreements with
cable providers since the summer.

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(But Will Cable Bahamas Comply
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4. (C) Cable Bahamas officials confirmed to EconOff that the
company is currently negotiating premium content packages
with HBO, Showtime and NBC Universal but has not made
significant progress, particularly with HBO. They will meet
for the first time with HBO representatives in two weeks.
HBO previously refused to meet with Cable Bahamas until the
Amendment was signed into law. In a private conversation,
Cable Bahamas President and COO Anthony Butler told EconOff
that he believes the amendment is a breach of the franchise
agreement between Cable Bahamas and the GCOB. Butler said he
would be "well within (his) rights" to sue the government.
The current franchise agreement expires October 13. Cable
Bahamas, he noted, is undergoing renewal talks from a
weakened financial position even though he believes the GCOB
"won't enforce the amendment." Ministry of Foreign Affairs
Economic Officer Alexious Rolle told EconOff that the GCOB
enforcement mechanisms include cease and desist orders,
licensure removal and, as a last resort, litigation. Rolle
noted that Cable Bahamas has 3-6 months to come into
compliance with the amendment and may be able to apply for an
additional three month extension.


5. Butler dismissed the idea of moving to the Television
Association of Programmers Latin America (TAPLAT) because it
does not offer the quantity of American content or timely
airing of popular shows. He also noted that TAPLAT officials
would not meet with his company due to the Compulsory
Licensing issue. "This is not a Cable Bahamas issue," he
said. "This is a Bahamas issue. Cable Bahamas cannot
compete without American programming. Bahamians are
accustomed to American programming and aren't going to give
it up so easily and the government needs to face that."


6. (C) Butler added that Cable Bahamas was only established
because it was protected under the exception clause of the
Compulsory Licensing Act. He said that his USD 250 million
operation cannot afford the financing required to obtain
premium content at the pricing levels the content providers
are offering. He did not believe that the August 5
Stakeholders meeting was helpful and argued that the U.S.

cable provider representatives were "a bunch of lawyers" not
willing to consider his situation. He requested that the
Embassy assist him in getting a fair hearing with the content
providers in order to negotiate favorable terms for the
small-market Cable Bahamas.


7. (C) COMMENT: The GCOB, looking toward WTO accession other
free trade agreements, passed the legislation in order to
conform with international trade norms. Butler says there
was very little consideration of Cable Bahamas ability to
compete without compulsory licensing. In spite of this,
Butler said the company is making a good-faith effort to
comply with the amended law. His frustration stems from a
very demanding customer base that is accustomed to U.S.
premium programming and is all-too-willing to purchase and
illegally install satellite dishes to extricate encrypted
material themselves. According to a recent local media
report, illegal satellite dishes comprise 21 percent of the
market and that number in expected to increase - to Cable
Bahamas' detriment. Whether legally obtained or not, U.S.
television content has become an important part of Bahamian
culture and heavily contributes to the affinity Bahamians
have for the United States. Cable Bahamas may have
difficulty entering into commercial agreements with providers
which perceive the Bahamian market as too small. USG support
for these negotiations is vital in order to ensure that Cable
Bahamas does not fall back into non-compliance. END COMMENT
ZUNIGA-BROWN